Usage of 'how'

Allowing them to take part shows how bilateral cooperation has advanced.

Here in the sentence, which one does how function as, 1 or 2

1. used to ask or talk about the way in which something happens or is done:
How can I help you?

2. used to ask or talk about the amount, size, degree etc of something:
How many kids do they have now?

Thank you so much as usual in advance.